Global return society

Finance has become interested in all things related to “the farm” as a production unit, but also in the pre-and e post-farm-gate stages of the agri-food chain. Although the turn towards farming as a financial asset seems to be a rather recent development, farming and finance have been deeply entangled for a long time. Finance and farming are not distant worlds. On the contrary, the development of modern finance is deeply connected to the world of farming. Agriculture as socially “produced nature” in many corners of the world cannot be thought of without taking the transformative, and often state-backed, powers of globalized financial relations into account. The production of settler-colonial agrarian landscapes in contemporary land rush frontiers such as Aotearoa New Zealand cannot be discussed without considering the far-flung financial networks that linked “the city” (metropoles such as London) and “the countryside”. The places where finance helped transform nature into landed property, people into (enslaved) labouring subjects, and animals into livestock were often “global countrysides” [1] from the very onset of colonial encounters. In these places, finance had its own ways of extracting surplus from farming. Often, this happened via the provision of state-backed or private credit. “Dashboard farming” started with the management of slave plantations in the Caribbean and the American South, where management and ownership of the farm became separated for the first time. Early stock exchanges, such as in Amsterdam, were also directly linked to trade in agriculture. Thus, the roots of modern finance have their origins in agricultural production.  

However, as research featured on this website shows, we have seen the rise of new forms of capitalizing on agriculture (via the provision of equity) from the second half of the twentieth century onwards, dating back as far as the 1960s in the UK. Today’s financial power of new actors such as pension funds or other investors is unseen and co-constitutes a historical formation we could call “the global return society”.  Other scholars have called this “asset manager capitalism” or “ownership society”.

(Ouma 2020: 4, 40-42) 

[1] Woods, M (2007) Engaging the global countryside: globalization, 
hybridity and the reconstitution of rural place. Progress in Human 
Geography 31 (4): 485-507.

While the finance-farming nexus does have historical roots, however, new developments are shaping the context for contemporary agricultural investments, such as 

• the unparalleled financial power of institutional investors, g., pension and insurance companies, which constitute a “wall of money” in search for ever greener pastures,
• a more general acceptance of financial practices and rationalities (associated with the rise of capital market-based pension systems and the massification of finance),
• a regulatory convergence on a planetary scale that has resulted in an unseen globality of finance,
• the crises of established asset classes, g., government bonds and partly stocks, in the wake of the financial crisis 2007/8,
• an increased demand for food, agrofuels and carbon sinks.

To capture the historical formation constituted by these trends my research mobilizes the notion of a global return society, which is a socio-spatial formation in which the reproduction of the better-off people of the Global North (and, increasingly, the Global South) has become tied to the reproduction of finance capital, both “at home” and abroad. Institutional landscapes across a range of economic fields are an expression of the global return society. Farming has become one of them. It can be argued that the ‘global return society’ is the stage on which the assetization of farming has unfolded, and it remains the stage even for investments that claim to do good or green or both via an enhanced ESG agenda. Others have also highlighted the friction between ‘the global return society’ and the ambition to create greener and more just economies. 

(Ouma 2020: 4f., 44) 

The global return society has engendered specific global value relations in and beyond agriculture that are characterized as follows, and which need rethinking as part of an alternative finance agenda: 

• Opacity of modern money management: Modern money management has a built-in opacity that no system of such “terraforming” power should possess. Despite the fact that most of the players interviewed for this book were quite accessible (some even posted their farm locations on their webpages – something that a real estate fund would probably never do), with only two asset managers being more secretive about their operations, it is still hard to get more detailed information about those who manage other people’s money, under what terms and with what geographical footprint. This is not only because financial and property market regulation is often tilted in favour of financial investors (particularly in the realm of private equity) but also because those who are supposed to regulate the world of investment “often share the same finance-centred view of the economy” [1]. Thus, the ambition to make the genesis and operation of institutional landscapes a matter of public debate is fundamentally tied to the project of technical democracy. At a time when a staggering US$74 trillion is in the hands of asset managers [2], unearthing their operations seems even more pertinent: who are the makers of institutional landscapes? On whose behalf do they administer the monies? Under what terms is capital placed and multiplied? Does the delegation model, often leading to complex and far-stretching investment chains, align itself well with concerns for more holistic, as well as spatially and intergenerationally more just, notions of sustainability?

• Expansive moment of money: Money can be seen as a claim on society and nature. Issued debt is at least partly fiat money: it may seem virtual since it is additional money created by banks (and the state), but it must be repaid as real money. To repay debt with interest, the money supply needs to be growing constantly which requires an increase in productive capacity. The latter always implies the use of natural resources. That is an expansive moment, because money invested becomes a claim on both society and nature, or more exactly, on the future income generated by human labour and nature. Today this claim is articulated via global investment chains. Even when modern finance acts more responsible or inclusive: This expansive moment of investment cannot be eclipsed.

• Scale and upscaling:  Tightly associated with how modern finance constructs value is its intrusive futurity. Key to the assetization of farming and other economic domains is that future expectations about value exert operational pressures on the present; the present becomes conditioned on the imagined future. Even with more robust ESG agendas this would be the case, especially if a range of intermediaries chained together need to be paid for their connective work. Scale, in a double sense, plays an important role in this constellation. Upscaling is an important practice in the world of venture capital and private equity, and all the cases featured in the research presented here were in one way or another driven by the need to upscale quickly to realize the promises made in investment proposals. Upscaling also plays a crucial role in achieving economies of scale (increasing output to lower fixed costs), both because transaction costs decline with the “ticket size” of an investment deal and because the pooling of supply, farm, and market infrastructure may further bring down costs when farms are purchased within the same geographical region. Economies of scale are certainly not a new feature of finance-driven agriculture. Historically, these have been linked to the plantation model of production, whose existence is tightly entangled with the category of asset itself. This model builds on “the global circulation of people and plants, the simplification of plantation landscapes, and the role of long-distance capital investments in such processes of homogenization and control” [3]. What is lost in scale-hungry agriculture in an attempt to make farms and agricultural firms amenable to efficiency-seeking management practices, even in cases when investors and asset managers are attentive to more substantial ESG criteria, is the often-complex socio-ecological relations that are a feature of more regenerative, agro-ecological farming systems [4]. Although some argue that modern finance lends itself well to unleashing the powers of “regenerative agriculture” [5], there is a difference in quality between regenerative and agro-ecological agriculture 

• Global inequalities: It is now increasingly recognized that the accumulation of wealth through financial channels and the growing inequalities within and between a number of countries are firmly entangled. If we “zoom out”, the assetization of farming, even though it is a rather nascent case, provides an opportunity to link debates on global inequality with the concrete operations of the global money management industry. The production and distribution of rents as income derived from the ownership of property, and the claims on income associated with it, are central to this. This is not simply a story about fictitious forms of value or capital based on speculative bubbles, as critics sometimes claim, because the materiality of nature and economic life still form an important base for the extraction of value from farming. Although those investing capital on behalf of the ultimate asset owners often capture a huge share of the rent relative to their capital contributions, they often still engineer and supervise “real” productive activities. They are not the ‘rentiers 101’, who John Stuart Mill famously described in the middle of the nineteenth century as people who grew “richer, as it were, in their sleep, without working, risking, or economizing”. It is the ultimate asset owners – “the people themselves” – who “grow rich while they sleep”, albeit often without knowing it.
• As in other investment domains, it is through the establishment of rent relations that value is transferred geographically from sites of farming to sources of capital, represented by both “Wall Street” (the money management industry) and “Main Street” (the original asset holders). If left unchallenged in farming (and many other domains), such rent relations further exacerbate national and global inequalities by advancing a variety of disjunctures: between the places where rents are produced and wealth is allocated; between places of land/ farm ownership and location; between surplus allocated to capital and surplus allocated to labour and nature; and between different social groups with uneven access to such schemes of wealth generation, as well as the underlying “assets”. More recently, many of these disjunctures have become contested with regard to their inequality dimension, from the fees that fund managers charge to the recalibration of land markets because of the growing appetite for land among well-endowed institutional investors.

(Ouma 2020: 171-176)

[1] Foroohar R (2016) Makers and takers: The rise of finance and the 
fall of American business. New York: Crown Business: 317.

[2] Fages R, Heredia L, Carrubba J, et al. (2019) Global Asset 
Management 2019: Will These '20s Roar? Available at: https://www.bcg.com/publications/2019/global-asset-management-will-these-20s-roar.aspx (accessed 12 December 2019).

[3] Davis J, Moulton AA, van Sant L, et al. (2019) Anthropocene, 
Capitalocene, ... Plantationocene? A Manifesto for Ecological 
Justice in an Age of Global Crisies. Geography Compass 13 (5): 
e12438: 4.

[4] Gonthier DJ, Ennis KK, Farinas S, et al. (2014) Biodiversity 
conservation in agriculture requires a multi-scale approach. 
Proceedings. Biological sciences 281 (1791): 20141358.

[5] Avery H (2019) Finance for a farming revolution. Euromoney. 
Available at: https://www.euromoney.com/article/b1hh4gj49rglv9/finance-for-a-farming-revolution (accessed 12 December 2019).